Marks and Spencer shares hit after Waitrose wins festive food race

Marks and Spencer shares hit after Waitrose wins festive food race

Marks and Spencer shares hit after Waitrose wins festive food race

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Marks and Spencer

Fightback: M&S sales figures have risen since a 7.1 per cent fall in 2008

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Sir Stuart Rose

Hoping: Sir Stuart Rose warned that the coming year would be tough

Fightback: M&S sales figures have risen since a 7.1 per cent fall in 2008

Shares in Marks & Spencer dropped a little less than five per cent today as chairman Sir Stuart Rose admitted he was "bested by Waitrose" in food sales over Christmas and warned the coming year would be tough.

M&S said sales in the 13 weeks to Boxing Day had risen by 0.8 per cent on a same-store basis with general merchandise up 1.2 per cent and food up 0.4 per cent. That was less than the average 1.2 per cent growth forecast by City analysts but Sir Stuart pointed out that because this did not include the first day of the sales underlying growth was nearer 2 per cent.

Waitrose saw sales rise 16.1 per cent in the same period.

City analysts were "underwhelmed" by the trading update and would not raise their profit forecasts for either this year or next. "If earnings momentum has stalled, the share valuation looks rich, putting more pressure on the incoming chief executive to identify a recovery story," said Katharine Wynne of Investec Securities.

Sir Stuart admitted he did not expect new chief executive Marc Bolland to arrive from Morrisons until late spring. "He has not been given a release date by them yet and I'm 99.9 per cent certain I will be presenting the full-year results in May," he said.

On the group's return to sales growth for the first time in more than two years, he said: "We had a good Christmas, continuing the improvements seen throughout 2009."

Sir Stuart revealed at least 50 M&S stores were forced to close because of the snow yesterday and more are likely to be hit today. He said: "If this goes on for a couple of weeks it means that there will be much less money going into the tills. But that will affect everyone. We had snow in the run-up to Christmas which was both good and bad for us. It saw a boost in sales of leggings, warm coats, boots and winter pyjamas but it also made it more difficult to get food deliveries and for some of our customers to get in and do their food shopping."

M&S had its best ever day on 23 December with sales of more than £50 million. It sold more than 36 million mince pies and one million bottles of champagne over Christmas.

Next raised its profit forecast yesterday but Sir Stuart said he was sticking with his current guidance to the City: "We still have our key final quarter to go. I don't expect there is going to be much help for our industry whichever new government we get.

"There is medicine which has got to be taken by the country and it will be something of a war of attrition to take market share from our competitors."